"squawk box" begins right now. ♪ live from new york where business never sleeps this is "squawk box. >> good morning. welcome to "squawk box" on cnbc. we're live at the nasdaq market site in times square i'm melissa lee with joe kernen. andrew and becky are out joining us is joe ter noe terraa cnbc contributor hope you drank some coffee today. >> already have. >> let's look at how u.s. futures are pointing this friday morning. looking to open higher the dow looking to add 50 points out of the open. s&p at about 7 nasdaq up by 18. let's look at the action overnight in asia. it's been a strong week overall for asia set to end the week up 1.6%.

the nikkei up a half percent hang seng up 1 111.2%. in europe, big effort gains in spain. crude, the one big driver for crude the past couple of days would be harvey. now a category 2 storm we're seeing wti crude up by 0.7% brent up by 0.7% >> welcome back. >> thank you great to be back >> when did you get back >> last night. >> last night. >> 8:00. >> all right do you feel different? do you -- >> why would you ask that, joe. >> i'm wondering -- feels g right? >> enjoyed it. >> congrats. everybody knows by now >> now they do if they don't, they're about to. >> misses melissa lee. is there a new name. >> i'm still me. >> congrats.

good to have you here. that's dedication, 8:00 last night -- >> anything -- anything to help you out, joe i will do. >> and the viewers >> here's the big stories we're watching today that was maybe the biggest in corporate news, uber could hold a vote for its next ceo as early as today uber is holding a board meeting later total. according to sources hpe c eshs ceo meg whitman will not be there, but former ge ceo jeff immelt will be there re/code reported earlier this week that immelt is the front-runner for uber's search for a ceo. amazon says its 13$13.7 billion acquisition of whole foods will close monday. it says customers will see

special savings, especially for prime members. kroger, costco, sprout, super value all fell yesterday wall street will be closely watching fed chair janet yellen today. she's delivering a speech in jackson hole, wyoming. the topic is financial stability and fed watchers will be looking to find out clues about plans to wind down the balance sheet. we will also hear from ecb president mario draghi full coverage throughout the day here on cnbc including an interview with cleveland fed president, loretta mester at 8:30 a.m. eastern. fed governor jay powell at 2:20 p.m. on "power lunch." the big story this morning is hurricane harvey, gathering strength in the gulf of mexico now a category 2 hurricane let's get an update on the storm's path from

wvit meteorologist kaitlyn mcgrath. good morning >> that's right. harvey's central pressure is rapidly falling as it continues to gain strength moving through the gulf of mexico already starting to make its mark on texas. you can see the center of harvey, again, continuing to tighten, becoming a stronger hurricane. forecast to become a category 3 storm later today. we can see the outer convective bands working their way on to the texas gulf coast this is just the start when all is said and done, expect 15 to 25 inches of rain with locally heavy downpours up to 35 inches of rain so we'll show you the track here and what we'll be watching carefully throughout the day today. harvey will continue to gain strength as it heads through the day today, working its way towards the gulf coast, towards corpus christi late their e corpus christi late their e thi evening. high tide this evening expect storm surge 6 to 12 feet

as it tracts clos s tracks cloo the texas gulf coast a number of watches and warnings in effect for the entire texas gulf coast we can see tropical storm warnings and much of the coast under the hurricane warning as we head through the day today. expecting from 15 to 25 inches of rain with some areas getting more than that the primary threat is flooding and how slowly the hurricane continues to leave texas once it makes landfall it will sit there for a number of days flooding will be the primary threat as we head through the next few days for the texas gulf coast. >> thank you since 2008, hurricane ike, the last hurricane to hit texas. it's all about the refiners, so much of the oil industry i was thinking about katrina, 2005, 12 years already >> yeah.

>> think how much has changed in the oil industry in terms of oil production, back then 25% of u.s. production was gulf of mexico today 18%. >> what is interesting is for anything energy investors they can't catch a break. oil and natural gas will be obviously spared this is slightly bearish for oil if you think about it. the refinery need for oil will not be there it's critical for refiners to not have flooding, but you are going to see flooding. the energy industry to your point that changed dramatically, it's because of technology and what it has done i don't think this is going to be necessarily the story for the energy industry that it might have been back in '05 and '06 >> we'll talk about that now a third of the refining capacity is in the gulf coast it goes from texas to alabama. jackie deangelis joins us now with more on the refiners.

she's live from corpus christi, texas. jackie. >> hi, good morning to you certainly that 25 inches plus of rain that is expected here is going to be a problem on these coastal areas, especially like this beach where we're standing. it's also the wind that has been kicking up some reports are indicating we could see wind later tonight when this potentially becomes a category 3 storm of 125 miles per hour those are some serious gusts you combine that kind of flooding and that wind, you start to have refinery shutdowns. there's about half of the u.s. refining capacity all along the gulf coast here in corpus christi you have five big refineries that have already started to shut down operations and evacuate personnel. there have not been forced evacuations. these are voluntary. as we were driving in last night you could see people leaving town you could see a lot of people in the middle of the night lined up at gas stations. we stopped at a walmart to get

supplies a lot of shelves were empty. people were filling up jugs from outside. people were moving out of this area as a precaution that's because the forecast is saying we could see this storm really pack a powerful punch tonight. if you do see some of these refineries shut down, this is a category 3 storm, we're talking about shutdowns of about 2 to 3 weeks, maybe potentially more than that. that's what the market is bracing for. it's been measured so far. crude and rbob have seen moves up right now it's a wait and see approach as this day progresses, i think you'll see more of a spike in some of those prices according to government data, it's not just refineries. we have about 10% of the onshore drillers shutting down facilities about 15% of the natural gas facilities are shutting down i expect those numbers to increase with time we have seen the crude market under $50 a barrel

rbob moved in lock step with it. this will be a short-term blip it could last a few weeks certainly. but it will move the markets >> we'll watch that is what we do but the more important thing, hopefully everybody stays safe more flooding than anything at this point >> it's the property and the casualty loss that i think will be the real story on the other side of this >> hopefully not >> well, obviously if it is going to be sustained over several days, you're talking about potential for 25, $35 billion in potential damages so you think of state farm, you think of all state obviously they hold a lot of the risk in that region. >> i saw some charts showing different scenarios. just for this storm. and depending on the track and -- there's here and here you have no idea >> but it's the flooding >> hopefully --

>> 25 inches of rain >> 10 to 15, or 25 to 30 it's going to be one or the other. hopefully it's 10 to 15. >> i think either scenario it's bad. >> it is but 10 not as bad as 30. >> true. >> i saw from some website there was something positive on the internals of the hurricane it may not go in as a 3, but a weakening 2 or 1 tax update from washington the trump administration will let congress take the lead on a tax reform bill. eamon javers joins us now with more >> reporter: white house official told me yesterday that the white house does not intend to put out its own tax plan as many people had expected they'll let congress take the lead on releasing the details of the plan here's what the white house official told me yesterday the congressional committees will take the lead on this that would be most likely the house weighs and means committee that

would put out the first detail there. they said passing the bill is more important than what the details are of the bill. also they said they're now intentionally using the phrase tax relief rather than tax reform to garner support for this bill. you heard sarah huckabee sanders yesterday at the white house press briefing asked about tax reform she gave an answer about tax relief some interesting messaging choices there and tactical choices. the white house was criticized during the obama care repeal and replace effort for not putting out their own bill and letting congress take the lead on that that effort was not successful earlier this year. we'll see if this can be successful addres a strategy th time around. we heard paul ryan telling ylan muai that he thinks congress can stick the landing also a possible spending deal floated by people in the white

house particularly on funding for the wall with mexico an official telling nbc news that the president will back a compromised deal which would fund the government for three, four months without funding the wall then trump would demand a border wall funding on an omnibus spending bill. speaker ryan talking to us yesterday saying he thinks there's going to be a need for a spending extension, so they won't be able to get everything done in the time frame they imagined so there will need to be a short-term spending bill between now and when the ultimate deal happens that is giving us a bit of a picture about how the fall will shape up politically in washington >> eamon, thank you. coming up, markets and commodities are in focus dennis gartman will join us after the break. who better on this hurricane harvey coverage that we're having both of you remember who -- if you say harvey, don't you think of the giant invisible rabbit?

no jimmy stewart? >> no. >> no. no. >> why is it only me harvey, fantastic. one of james stewart's greatest movies it was about a guy who was friends with a six-foot tall invisible -- >> i'm not going to watch it. >> it's good you should. >> later this morning, blackrock's cio of fixed income, rick rieder will join us "squawk box" will be right back. ♪

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for only $34.90 more per month. call today. comcast business. built for business. stocks to watch today. twitter downgraded from hold to buy. jeffries says twitter will lag behind google and snapchat when it comes to digital video, which he calls the biggest opportunity across social media over the next few years. ulta beauty. can i buy a consonant? can i buy an "r" >> you mean ultra?

i think they misfiled it ulta sinking in the after hours session after reporting earnings gamestop second quarter profit falling shy of forecasts. revenue beat estimates the nintendo switch console helped results gamestop expects a boost from the apple iphone when it's released there's just one piece of economic data to wrap up the week, july durable goods out at 8:30 a.m. eastern time economists are looking for a drop in heavy alliances, aircraft and construction equipment. dennis gartman is here to talk broader markets, and our guest host today, joe terranova, a cnbc contributor dennis, good morning to you. good to see you. >> good to see you welcome back congratulations. >> thank you very much good to be back. want to ask you about harvey i come back, all this talk about

a category 2 storm that could make impact to houston we did see a bid to refiners in yesterday's session or over the past week or so. >> i think what's interesting is how solidly and how well the futures market has anticipated in and tells you what's going on this will be a short-term event it could be very serious somebody who lives near the ocean like i do, we worry about hurricanes all the time. this is already a category 3, it may slow down to cat 2 and possibly cat 1, but there will be repercussions it's put downward pressure on crude oil, when you think about it, thedemand for crude will decline. at same time refiners will be curtailed. so you will see a shortage of gasoline and distillate. as soon as you go out past

november and december, you can see them weakening the market understands wha happen >> wells fargo had an interesting note out in the month of june that refiners, the stocks, tend to return about 6% on average in the ten days following the landfall of a hurricane. i don't know if you buy that that f that sounds about right to you or if you think the market will anticipate that and put that in the stocks up front? >> in all likelihood the refiners will do better. the crack spreads have widened out dramatically in the very nearby futures however any increase in the refiner stocks predicated upon an expansion of the crack spread for the near-term probably will be short-term in nature. i would not be a buyer >> good morning, dennis. you and i have seen many cycles in the commodity space it's confusing this year you have the u.s. dollar which continues to move lower. most commodities can't catch any form of a bid.

what is it that you see as being the reasoning behind that? is it the advent of technology and the increase in terms of supply because of that or are we in part of a cycle that will recover once again >> there's two things. the technology changes that have occurred in the oil industry have made it less and less expensive to get the same crude oil out of the ground that clearly puts down waward pressu on crude oil at the same time technology created a much better crop on a year over year over year basis year in and year out, drought in, water out, we grow more corn, more cotton, more soybeans, more wheat per acre than the previous year finally you have what had been a stronger u.s. dollar, but since the turn of the year it's been weaker hopefully a weaker u.s. dollar will spur export trade, we'll begin to see that happening in the wheat market for the first

time now wheat has been impossibly overpriced in dollar terms in the course of the past month or so wheat has become more competitive from the u.s. than in the past. if we see some tenders for the wheat market showing up in the next week or two, that may be the first signs of a slowing of the deflationary pressures in the commodity markets. i want to err upon the side from this point going forward to being bullish. i need to see reasons to do so >> decembnnis, the s&p is off 2 from the 52-week record highs jackson hole will be a major event. everybody is focused on janet yellen, but mario draghi has been known to go off script. he's said some interesting comments in the past that have moved markets what you are looking for today? it could be a quiet friday or a volatile one >> i'm hoping it is a very boring friday.

one is always suspicious of that sort of thing. the stock market is a bull market i have found it impossibly overpriced i tend to be skeptical of it nonetheless it has moved from the lower left to the upper right for years upon years upon years. it will continue to do so until it stops as far as the expectations today from mr. draghi, i hope he has, as he has said in the past week, that he has no major announcements to be made we expect to see something from ms. yellen, probably some timetable as far as the reduction of the fed's balance sheet. i'm hoping there's very little i'm hoping for boredom boredom is far better for me as far as i'm concerned >> going back to monetary policy there's been a put underneath the market that has attributed to this. if you mroef the pyou remove thu don't get the fiscal policy

initiatives, can we act in continuance for seeing asset appreciation >> one would have doubts i think the major precursor, the major fundamental behind the driving prices of stock going higher from the lower left to the upper right have been the monetary authorities being extremely expansionary in policies the monetary base in the united states expanded four fold. the ecb three fold without that increase in the monetary aggregates, there's probably not that much fundamentally in the economies of the world to allow stock prices to be where they are. if they slowed down, at some point if they begin to allow the monetary aggregates to decline, that's going to be deleterious to stock prices. so the market will stop when it stops, it will stop when the monetary authority begins the slowing of and reduction of monetary aggregates. were you saying there's a fiscal policy put

i would think that the put has been gone for a long time. >> that's actually my point. so -- >> okay. >> you have the monetary policy put. we heard for years from the fofom krsh we need fiscal policies for the handoff to occur the belief is that you don't get them you remove the monetary policy put, you need fiscal policy, in the absence of that it seems like you have a problem for asset prices >> right dennis, good to see you. thank you. >> dennis, you can confirm harvey was a six-foot tall invisible rabbit, can you not. >> i can confirm has harvey is a six-foot fall invisible rabbit you and i are the old geezers -- >> we're film buffs. nominated jimmy stewart for best actor.

guess what won best picture in 1951 >> you got me on that one. >> "all about eve. jim stewart did not win for harvey but won for "philadelphia sto story. right? yes. coming up -- can you do a jimmy stewart? >> no. >> they broke the mold with him. >> they did. >> so great. >> people on snap don't know who he is. >> bring me back bring me back. tax reform in focus. we'll talk about the road ahead for the republican congress and the trump administration judd gregg and ed rendell join us next. as we head to break, yesterday's s&p 500 winners and losers ♪ what powers the digital world. communication.

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♪ >> welcome back. you're watching "squawk box" live from the nasdaq market site in times square. >> good morning. welcome back to "squawk box" let's look at how u.s. futures are pointing this morning. they've been higher across the board for all the morning. even gaining some strength here. the dow adding 62 at the open. s&p up by 8, nasdaq higher by 22 now to a developing story in the gulf of mexico, hurricane harvey

gathers strength the storm a category 2 hurricane is expected to make landfall in southeast texas later today. widespread evacuations have been ordered up and down the texas gulf coast we're seeing a big reaction in the energy markets we'll bring you updates from texas throughout the morning on this >> all right on to real news of the morning, entertainment news, taylor swift's new single dropped overnight. the pop star's latest track "look what you made me do. it was released midnight it's generating plenty of buzz hype surrounding the release began last friday when swift wiped her social media platforms and then posted a teaser video she posted a link about information on concert tickets the site has been unavailable since midnight thanks to an extreme amount of fan activity this is a business story because

she wakes up and makes about $1 million, i think on any given day. >> yeah. >> yeah. >> what an incredible marketer of herself, a huge talent, writes all those songs >> very talented kept her reputation relatively clean compared to a lot of other stars out there. >> when you have a 9-year-old daughter you will pay any price to make sure she's at the taylor swift concert. >> i've been to two. not embarrassed to say i've been to two. with or without -- >> the kids weren't interested -- yes! >> just clarifying >> i didn't go last time maybe i'll go this time. >> i know. her dad is a great guy, been a merrill lynch broker scott. he watches the show. i hear from him, too amazing. i don't -- i think he might be like robert duval now, he has one client you know -- not really, but he could. think if he just managed --

turning to politics. in an exclusive interview with cnbc, house speaker paul ryan said he and president trump are on the same page when it comes to tax reform. >> we have a shared agenda the president and congress are eye to eye on this agenda and on these priorities i've spoken to the president more times than i can remember about how we agree on getting tax reform done. so this is not one of these issues where you have a difference in priorities between the house, the senate and the white house. we're totally on the same page on this. >> joining us now to talk tax reform, the debt ceiling and a possible government shutdown, former new hampshire senator, judd gregg, and former pennsylvania governor, ed rendell. these gentlemen are old friends. i think there's always a camaraderie between governors, right? you guys actually have to make decisions, do things you actually have to remember what you did a year ago. it might have been good or a

disaster there's something between you two. is it a brotherhood of governors? >> i think every governor -- >> they even talk at the same time that was my fault. >> we do it in unison. >> you almost do do you have -- do you think we'll get any differences on how we view the current political back drop? the dynamic between president trump and congress, judd what do you make of it i don't know whether i would call you an establishment republican, but i don't they you were ever necessarily on the trump bandwagon in a huge way, right? >> well, i'm a hard core fiscal conservative i believe we have to run a government within our limits of what we can afford as a very practical matter, i do think that we have good people leading the congress i do think that they will produce debt ceiling bill and pass it. i think they'll produce extension of spending bills and

pass them through some sort of continuing resolution. and i fully expect with paul ryan's leadership and mitch mcconnell's leadership and secretary mnuchin's involvement that you will get tax reform before the end of the year >> i know you have seen some of the scuttlebutt. the journal is trump divorces the gop congress some of the other major newspapers, you know, they're all over this rift between the republicans in congress and the senate and the house and president trump. you don't think that's going to be an impediment to getting something done >> no, because we're in a period of what i call survival politics basic instinct of every elected official is to get re-elected. i think republican members of congress recognize if don't pass something significant, and the most significant thing they can do is tax reform they'll be in serious trouble next year. i think survival politics kicks

in here. you'll get a tax reform bill because of that and because you have strong leadership, especially from paul ryan, who is really the intellectual leader on tax reform and wants to drive the process forward >> do a quick -- the president is tweeting. what time is it? about that time. the president says if senate republicans don't get rid of the filibuster rule and go to a 51% majority, few bills will be passed 8 dems now control the senate. we'll be monitoring for more ed, i want you to get -- as a democrat, get past your -- do you think it's in the best interest of anyone in the party to work on tax reform or block everything >> no, i think it's important that we do tax reform. i would couple it with infrastructure the way to fund infrastructure is through tax reform.

the tax code taking the money overseas and bringing it back and dedicating it towards infrastructure passing a gas tax increase, but saying to the average citizen, middle class citizen we're giving you a tax cut worth $2,000 we're raising your gas tax $140 a year that's a good tradeoff so i think democrats understand that sfrux infrastructure is th to create well-paying jobs, millions of them over a ten-year period if they couple them, there's a chance to get significant democratic support the thing that senator schumer said and that judd and i both agree, it was a welcome pronouncement, tax reform at the very least has to be revenue neutral it cannot add to the debt because we have a real debt problem in the country that no one seems willing to face up to. >> we'll do infrastructure and a revenue neutral -- now, judd,

you must think -- i know you're a fiscal conservative. when you do a little dynamic scoring there, would you differ from ed on that much >> yes >> they'll seize on that he already said he will use 3% compound rate over ten years you can go a lot of tax reform >> will that get democratic support? >> you're not going to get democratic support for tax reform or anything else. as much as i wish ed were running the senate democrats, it's not being run by ed, it's run by elizabeth warren and bernie sanders, they pulled the party hard to the left their base won't tolerate accommodati accommodation on anything, maybe infrastructure so you have to do a tax reform bill passed under reconciliation, it will have to

get 50 votes unlike healthcare reform, there's consensus in the republican rank and file membership for tax reform. i think you can get -- you can do it that way >> ed, are you sure you're playing it this right? not you, but your party. seems like things should be going great for the democrats now. what was that -- what was that slogan that middle class thing you had out a couple -- i already forgot it. something about -- like a papa john's thing better pizza, better ingredients. >> better deal better deal. >> papa john's came on and said that's ours. you're not raising money now i don't know who the leader of the party is i don't know what message is do you you're kind of lost in the wilderness. >> >> one correction the dnc is not raising money that competes with the rnc, but the democratic congressional campaign committee is out raising republican and -- >> do you think he'll take back the house in 2018? >> i think we'll make significant gains.

i don't know if we can take back the house. jury commandma jurymandering was so severe after the 2010 election, it's a high bar to take back the house. we'll make gains we may surprise them in the senate elections >> ed, you're like a republican compared to the normal democrat. you heard what judd said about if someone besides schumer -- do you back 100% of what's happening now with your party in congress and the way they're handling things? >> no, i wrote an op-ed piece published in the new york daily news we can't let the problems facing america go and do nothing for the next 3 1/2 years we have got to do a good tax reform bill where the major benefits go to working americans, middle class. that's number one. that's going to be -- you'll get democratic votes if the majority of the money that's cut out of the tax code goes to the middle class, not the top 1 % or 2%

you'll get democratic votes to support that i think we do need to be realistic about infrastructure needs to be government investment we can pay for it with the two things i said. the modest increase in the gas tax, senator corker sponsored a bill that would raise it 10 cents a gallon and with taking the money that's abroad and repatriating it and giving it to infrastructure, you could do a revenue neutral significant infrastructure package. would get strong democratic votes for that there are democrats out there who know the government has to function we have to deal with problems. president trump's going to -- is in the process of killing himself. we don't have to worry about that let's get some things done for the country. >> you two guys are old salts in this business. i'm wondering, you know what will it be like -- is he going to be there for four years, ed rendell? what's the country going look like what are democrats going to look like what's cnn going to be doing for

the next four years if president trump remains in office in th this is a circus, isn't it. >> every day it's something else >> never seen anything like it i said you guys have been around since, you know, for a long time and judd, is this -- is it business as usual? will it be some day? is this just unprecedented, it's never going to heal. >> i don't think it will ever be business as usual. i don't think the president has an approach to government that is anything like a traditional approach he's a round peg of populism and basically an expression of lack of discipline in delivering his message, trying to fit into the square peg of governing governi usually requires compromise to be successful. we're in for a period that will be, as you say, an up and down period you used the term circus i won't use that term, but it

will be entertainment at least >> in defense of president trump, we have seen what a square peg in a square -- or a round peg in a round hole has given us for the past 20 years we've seen the swamp, whatever you want to refer to it as maybe a little disruption was in order. obviously some people in the country thought it was >> i agree with that 100%. >> but what he's done -- >> you ought to try to put things back together and make them run >> ed? what he's done, he's drained the swamp of the alligators, pu he put but he put in crocodiles >> i don't know the difference that way i think they're both cool. it's like dinosaurs that are still around thanks like you two guys, kidding thank you both it's good to see you this morning. i'm a dinosaur, too. nobody i'm with knows who harvey is >> the question is are you a crocodile or alligator. >> one has a longer snout,

right? is that the difference they're both reptiles, cold-blooded >> i don't know. we'll look that up during the break. coming up, hurricane harvey bearing down on the texas coast. we'll talk to lipo oil president andy lipow about the impact on refiners and rick reider will join us later. and steve liesman will be speaking to cleveland fed president loretta mester st tayuned, you're watching qux squx "squawk box" on cnbc

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. breaking overnight, a south korean court sentenced jay y. lee to five years in prison. chery kang joins us from seoul with more. chery? >> reporter: thank you very much, melissa. he is facing five charges including bribery. he has been found guilty on all accounts the prosecution was seeking 12 years of jail time for jay w. lee. but i think the reduced

sentencing by the lower court today can be explained by the fact that certain elements have not been recognized. but the court and the judge reading out his ruling said he was shocked to see this kind of cozy relationship between political and corporate circles in the country still existed as far as reaction is concerned, samsung electronics did not come out with an official statement one official told me that this is about jay y. lee and his personal he'll case. so samsung is not coming out with reaction here his lawyers did say in their immediate reaction saying they cannot accept this ruling and that they plan to appeal there was a political corruption scandal thatgripped the country since late last year a publicuproar that eventually kicked out the president of

south korea. and now samsung electronics has to operate without its de facto leader for some time if this case goes all the way up to the supreme court, then this kind of uncertainty could continued through the first half of next year melissa? >> chery, thank you. chery kang joining us from seoul. is your company prepared for a cyberattack? most companies are not according to a recent report we'll talk data security next. a quick check of the european markets right now green arrows across the board.

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cyber crime is becoming more and more common, but most companies are still unprepared for attacks, according to an e-book release earlier this month. peter is founder of the e-mail and data security company. good to have you with us. >> thank you. >> it's shocking because you always hear about these attacks, and they get into a company by

just one employee clicking open an e-mail. i mean, something very, very fundamental. so as much as you're saying companies don't prepare, are employees really educated about what to do with their e-mails to help protect the company >> well, this is the thing, an e-mail has become such a successful technique for attackers. it's rated as the number one attack vector for cyber security today. at mimecast we focus on making e-mail safer for business to try and help organizations address the risks that really come through e-mail every day into employees' inboxes. >> so tell me about what mimecast does and the product in terms of how it can actually help defend that sort of very weak link. because e-mail's so common, it's used by everybody at the company at all levels. that seems like the easiest way to breach a company. >> well, one of the things that we've seen really coming through is impersonation attacks so where somebody pretends to be somebody inside the organization and uses social engineering techniques to get data or to get

funds transferred. so we've developed a number of sophisticated technologies to help employees identify where impersonation is taking place, and also to block those e-mails in the first place prevent them from ever getting in. >> let's walk through one of those examples because it is staggering the amount of information about any one employee on the internet particularly with social media you can go onto facebook and see where people have been, conferences and see where people have been, speeches people give, posts, it's easy to come across somebody who is familiar to that employee. >> absolutely. that's the huge challenge because people are trusting by nature so when they receive something that looks like it's got information that only a certain person would know, they're not aware at that point in time how much work could be going in behind the scenes in order to scam that organization. >> in terms of companies and the reason why they would spend the money up front on preventing an

attack, insurance is become a very more widespread sort of thing to have for a company for cyber security if they have a company like yours helping them protect themselves, are their insurance premiums lower >> i think the industry hasn't quite gotten to -- >> okay. go ahead. >> the industry hasn't quite gotten to a point where insurance premiums are considerably lower as a result of having specific technologies in place but i think cyber security has broadened to become a cyber resilience issue because the latest attacks have been affecting the integrity of data and have been highly disruptive to operations. so it is something that the entire industry has to stand up and have a look at. >> okay. peter, thanks so much for coming by we appreciate it peter bauer, ceo of mimecast, up about 53% year-to-date on the nasdaq. coming up, hurricane harvey bearing down on the coast of texas. we'll tell you how it's going to affect drilling operations

and fed heads are in jackson hole we are going to talk about that and talk to cleveland fed president loretta mester at 8:30 a.m. eastern are you leaving? no, you're staying i want you to stay for another hour. >> he's staying for all three hours. >> you're here for the whole time >> i'll stay an hour for you and an hour for -- >> i said it he's here for -- >> "squawk box" will be right back

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chair janet yellen's speech this morning in jackson hole. a preview of what to expect coming up as the second hour of "squawk box" begins right now. >> announcer: live from the beating heart of business, new york city, this is "squawk box." good morning and welcome back to "squawk box" here on cnbc we're live at the nasdaq markets in times square. i'm melissa lee along with joe kernen joe, senior managing director and a cnbc contributor let's see how the markets are going to shape up on this friday we have been seeing strength in the futures all morning long dow looking at almost 70 points, s&p up 10. nasdaq up 22.5 stocks are on track for a winning week, but apparently without a great deal of conviction according to weekly

data, pulled for the sixth straight week of outflows. investors focusing on jackson hole, wyoming today and the kansas city fed symposium, janet yellen will speak this morning and mar yo draghi will address the event this afternoon our steve liesman is at the event. we'll hear from him later this hour the dow jones will be undergoing a merger dow-dupont replace the old dupont all this expected to happen prior to next friday's open. >> can you imagine what they pay to change the logo >> months and months -- because it could have been dupont-dow. >> no. >> no, really. >> there was not much thought probably but they could have had a whole new name. >> mondelez might want that.

hurricane harvey makes landfall later today may upgrade to hurricane. i'm joe, kaitlyn. >> hi, joe i'm kaitlyn. bans of harvey already working their way onshore as harvey continues to strengthen as a category 2 hurricane but when all is said and done it will make landfall as a category 3 hurricane. so we're continuing to keep an eye on its path and what we can expect along the texas gulf coast in the upcoming days so here it is right now, again, turning just to the south and east of corpus christi, texas, winds already at 110 miles per hour and it is going to continue to move toward the gulf coast as we head through the day today, expected to make landfall late tonight and early tomorrow morning. as we head through the rest of the day today approaching texas with winds at 120 miles per

hour so here's what we're looking at in terms of impact, rainfall, catastrophic rainfall between 15 and 25 inches. isolated areas seeing up to 35 inches of rain and with that a storm surge of 6 to 12 feet now, keep in mind once that storm surge moves in, that rainfall is going to have nowhere to go. so flooding is a major concern as we head through the day today and really through the weekend and into next week this storm is really going to churn in place once it works its way onshore and winds in excess of 111 miles per hour again, approaching the texas gulf coast as a category 3 hurricane. so wind damage is certainly a concern as we head through the upcoming days as well. that is latest on hurricane harvey i'm kaitlyn mcgrath, back to you. >> okay. and i'm joe kernen, thank you, kaitlyn. jackie deangelis is live on the gulf coast looking at harvey's

impact that's a great shot, jackie. >> reporter: good morning to you, joe well, this is what you could call the calm before the storm and even in the few hours that we've been here you can feel this wind really starting to whip up. the rain has been intermittent, sometimes pretty strong so far as we're getting under way here. you had the state of texas declaring a state of disaster. louisiana declaring state of emergency and allocating funds for storm preparation yesterday. so far no forced evacuations, but certainly voluntary evacuations from this area as the expectation is this storm is going to pack a powerful punch as early as tonight. also, the white house says that president trump has been briefed and the white house is ready to step in and allocate resources as well, depending on how severe this storm ends up being but as you mentioned, right now from the business perspective, we're looking at the energy market and the impact we could see on big oil and also the

refiners government data is saying at this point that 10% of onshore drilling has already shut down and about 15% of natural gas suppliers have also temporarily shut down. when we come to the refiners, you've seen that move in rbob gasoline and that's because you've got a little less than 50% of the nation's refining capacity along the gulf coast. here in corpus christi five big refineries, also some shutdowns. it was an interesting sight as we were driving up you could see the refineries alongside the road all lit up. it was very picturesque for oil country. and i imagine by the time this storm hits all those lights are going to be out. the weather report mentioned the kind of flooding we could have here, 25 to maybe 35 inches. if you see the lights go out here, the power outages, the flooding and the wind, and these refiners start to see some trouble, category 3 storm they could be out of business for

about three weeks time so this is definitely going to move the oil markets, which have been a little bit stuck in the dead period of summer here as we head into labor day. it's not necessarily a long term move but could get crude oil back over $50 and it could raise prices at the pump, guys back to you. >> we're going to talk about that right now, jackie for more on hurricane harvey's potential impact on the oil industry, we're joined by andy lippow, president of lippow associates if i gave you the exact amount of rainfall and the wind velocity and where it hits, could you tell me, plug that in and get exactly almost how much gas prices go, how much refining is shut down, could you do that almost >> i could give you an estimate for sure because with a category 3 hurricane, those refiners in corpus, they're down a couple weeks. so you have nearly a million barrels a day of refining capacity there and it is very easy half is gasoline and a third is diesel if that storm makes its way over to houston, we take out about

2.5 million barrels a day of refinery capacity, it's likely to be more a category 1, category 2 type event, so maybe they're down one to two weeks, because the biggest issue is going to lose power. the inability to get crude in and products out and a big concern is whether the pipelines are going to continue to operate and supply markets out of the gulf to places like atlanta or charlotte or washington, d.c. >> so where it makes landfall is the most important thing that i need to tell you here? whether it's corpus christi or houston? >> yeah, the landfall. i'm going to look at the northeast side, that's the dirty side where all the rain is going to be dumped. >> do you have the -- before you came in here do you have the very latest track that they're expecting? >> i think the very latest for the landfall is about 100 miles to the northeast of corpus, which is kind of good news for the corpus refiners because then they're on the cleaner side. but it's sort of bad news as this storm moves in. and then to the east and to houston because we're going to

have four to five days of rain continuing to dump on that location >> and we still -- we have to worry about whether it parks itself there too you never know in advance, i guess. >> that's right. i mean, now the entire industry is just waiting to see if you look at the national hurricane center, this storm can still be in houston on tuesday and wednesday. so that's a long period of time to accumulate 20 inches of rain. galveston and other surrounding areas might be 35 to 40 inches of rain. >> if we're talking 30 to 40 inches of rain, what does that mean for -- i would imagine not only is equipment down, but it could be damaged, which would make them offline for much longer. >> right if we get rapid accumulation in 24 hours, the refineries simply can't pump the water fast enough out of the location. and of course that water is rising and you can imagine water over electric pumps is not a good match you've got to then repair all those pumps. that could be weeks and months. >> so this potentially is

obviously bearish for natural gas because of the lack -- or need for power and bearish for the price of crude oil. and, joe, the department of energy is not very good when it comes to trading oil because we are selling 14 million barrels out of the spr by the end of the month because of the budget we're using it as a piggy bank so the timing of selling the 14 million barrels is awful, but the impact is obviously going to be bearish for crude oil itself. >> yeah, certainly every time they come out and some more spr it's adding more supply. what i will say about this event, we talked a lot about gulf of mexico production being shut in, eagleford production is going to get shut in in a big way because those major pipelines delivering oil into the corpus christi area, they are shut down. nothing's going to be moving. >> sure. >> so, yeah, we don't even think production because that's louisiana. katrina was more louisiana, that's where we thought

production and refining, but more production. >> exactly 90% of u.s. gulf of mexico production is basically south of new orleans and over to the east >> so everybody has heard of the galveston hurricane, i guess, right? they had a loss of life and everything else. that was a long time ago. >> long, long time ago, but i d remember alicia and allison and these were big allison for sure was a big rainmaker event. even though it wasn't a hurricane, it was a tropical storm. >> when was that >> about ten years ago alicia was '83 in alicia we had category 3 hurricane, it shut down the refineries in the houston, texas city area, allison, tropical storm refiners continued to run but became a huge flooding event. >> there's been a lot of changes in the industry overall since the last huge hurricane made landfall in texas, katrina i mean, it's been a decade or so and a lot's changed. in terms of how you look at the impact on energy markets, how

has that changed between now and 15 years ago or so >> so in 2008 we had ike hit houston. that was a major event with lots of shutdowns the industry is much more prepared to get the refineries back up and running quicker, but there's still a lot of time it takes to do that one of the other things is we have all this domestic oil production so it's not impacted by tanker traffic. so that's sort of the good news is that a lot of the domestic production will continue to show up in the refineries and on the other side of the equation, the refiners have added capacity to the extent that we're a huge ek porter of product off the gulf coast so in this type of event the exports will slow down, mexico could see some shortages or the state of florida, but there's a lot of supply available to move in the pipelines as they get going. >> andy, thank you andy lipow. >> thanks for having me. >> amazing if you wiki, texas, i mean, they have data going back to 1527 on

hurricanes, the number of fatalities, exactly the strength when did we first know that it was coming what year do you think -- before that you're just sitting there like, wow, pretty nice day and suddenly it hits you was that in the 19th century at some point when do we have any forecasting ability at all >> it was probably 50 or 70 years ago. >> so before that this came out -- can you imagine >> they just kind of showed up and you saw a change in the winds. >> you might be taking a ship somewhere, setting out on a voyage that day when a hurricane is bearing down on you, you have no idea. >> that's exactly right. when this hurricane came into the gulf of mexico and you're thinking about refining, the first thing that happened was all the shipping was impacted because they have to clear out 24, 48 hours before it shows up. >> right they didn't know but all these amazing at how much data they have going back to 1500. i'm telling you al gore is going to tell you -- never mind. i'm ready for that it's going to happen any minute. andy, thank you. >> appreciate it.

coming up, the fed, markets and your portfolio joe terranova, and we'll get reaction from blackrock's chief investment reader. and paul ryan not worried about the possibility of government shutdown next month. we'll talk more with the senior vito the bipartisan policy center you're watching "squawk box" on cnbc

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welcome back to "squawk box. futures right now on this -- is it friday? wow. i love fridays up 63 after all is said and done yesterday it was a down session. today that has improved. when i was coming in it was basically at least for futures fair value it was 26 if i saw zero on the futures it was up 26 on my way in, right? if i wasn't looking at the calculations nasdaq up 20 and the s&p indicated up just under 9 points. >> let's talk with our guest host this morning, joe terranova. joe, we were talking the markets being 2% off highs. >> yep. >> we're talking about outflows for however many weeks what do you do here in the market sns. >> well, i think the important thing to understand is rotation.

because i don't know necessarily that markets are correcting more than they're rotating from one asset class or one particular part of the equities market to another. and i think the f.a.n.g. stocks clearly took us up at the beginning of the year. you and i talked before, amazon clearly right now is in retreat, down close to 10%. market's stabilized ironically enough yesterday afternoon when the news came out about whole foods. so you have to keep an eye on the f.a.n.g. stocks right now and see what the overbearing trend is going to be do they continue to move lower if they continue to move lower, the question becomes, okay, where does that money rotate to versus correcting. because that is what we have witnessed all year clearly sources of opportunity remain in the emerging markets because of the lower u.s. dollar i think that's where a lot of institutional money managers are kind of hiding out so far year-to-date hedge funds are incorporating the short vol strategy, keeping a lid on volatility any time we see it spike and domestically in terms of sectors, i don't think you can go wrong with health care.

it seems to be somewhat immune from the dominance of amazon and performing well year-to-date and some of the older lying technology names like microsoft continue to perform well because they exhibit growth. >> you think dollar will remain weak i think that the question mark about draghi today is that he talks about the appreciation of the euro because weak dollar could really be seen as it's more about the strengthening euro year-to-date. i mean, it's up 12%. >> i would agree with you. i think draghi has to address what has gone on with the euro and does it become a problem at a point making predictions on where currency goes i learned a long time ago that's a great way to lose a lot of money more than anything else i think you want to react accordingly to what happened. so if we did see a reversal in the higher trend for the euro and see a little bit of a bounce in the u.s. dollar, then you say to yourself, okay, does some of the money rotate out of the emerging markets which would be the natural reaction in that scenario and then you follow accordingly. >> so you say a rotation is happening or will be happening in the markets.

>> continues to happen all year. >> you still like technology, you still like health care, those are among the best performing sectors of the year even though there's a rotation happening you still say stick with the winners. >> well, i think -- yes. >> where's the rotation happening? >> at this point in the cycle you have to stick with the winners. but we continue to see the rotation i think it's more -- we tend to talk about equities, but let's look bigger picture. on the institutional side you have multiple asset classes. no one talks about taxable fixed income for a second. you talk to any corporate bond manager it's been a fantastic year they've performed really well. so we like to talk about financial institutions and everyone says, okay, when's the equity of financial institutions going to bottom you can make the argument in november they did. but any type of offering on the debt side for a financial institution there is overwhelming demand for ownership of that bond on the financial side so i would argue that it's very important to have that broad perspective when you look at all asset classes in a portfolio and i don't think we do that

enough we focus too much on equities. >> you have gundlach on, did you read that -- >> i don't know that to be true. i will tell you that the experiencing -- >> assets down under 13% you want me to send you the article? >> you can send me the article i don't know that to be true i will tell you the experiences i've had on air with jeffrey, the information he has provided to us has always been accurate and good. >> about equities? >> well, he called trump he called the trump election. >> i don't want to get into -- i just wondered. because he's on all the time, right? >> he is on quite a bit. >> i think it was zero head. >> he brings a strong contribution. >> okay. >> are you looking for the article? >> yeah, i'll send it to you >> but, mel, for one second, i think the other thing in looking at broad asset classes and we talked about this before -- >> battle to keep star from fading it was actually a bloomberg

report times are tough, it says, especially for hall of famer such as jeffrey gundlach as "the wall street journal" report assets decline 13%, not hard to see why some like to chase hot money managers and gundlach's barely beat the benchmark. >> okay. don't know commodities. let's kind of finish the conversation i think that is where you almost look for the ke thardic moment it just has not performed over the last few years. >> which, oil? >> i think in general, whether it's grains, commodities itself, now it seems everyone is rushing into metals now. >> yeah, copper at a three-year high. >> everyone talking let's be in the metals right now i think you have to look at commodities as the asset class and say to yourself are we getting to the cathartic moment in a cycle >> will we see in a commodities market, what does that look

like >> it always ends with learning about institutions that lose a tremendous amount of money in the asset class and have to liquidate. that's always how the cycle ends, when you hear those stories. we have not really heard those stories just yet >> huh. >> i think those are the things you have to look for. >> all right joe is going to stick around, both joes. >> yes, i have to. i do i will be here >> are you still looking at that gundlach article >> no. i don't know your e-mail >> well, let's not do that on air. >> we can exchange that afterwards. >> coming up, house speaker paul ryan speaking to cnbc yet about the nation's tax system and the push to reform, a recap of his comments and reaction straight ahead. and we're continuing to watch hurricane harvey as it nears the texas coast. you're looking at live pictures there of preparations under way in houston "squawk box" will be right back. so you miss the big city? i don't miss much... definitely not the traffic. excuse me, doctor... the genomic data came in.

thank you. you can do that kind of analysis? yeah, watson. i can quickly analyze millions of clinical and scientific reports to help you tailor treatment options for the patient's genomic profile. you can do that? even way out here? yes. even way out here.

twitter downgraded to hold from buy at jeffries. the analyst says facebook will be the clear winner in social media. he suggests twitter will also lag behind google and snapchat when it comes to digital video,

which he calls the biggest opportunity across social over the next few years that stock down 3.1% right now al ta beauty reporting -- beat forecast same store sales rising 11% topping estimates but that growth slowed from a year ago. that stock getting hit down by 5.4% gamestop second quarter falling shy of forecast though revenue beat estimates video game retailer says nintendo switch console helped results and expect a boost from apple's new iphone when it is released coming up, wall street will be closely watching fed chair janet yellen today, she's delivering a speech in jackson hole, wyoming, today. a preview of what investors should expect is next. and in the 8:00 a.m. hour loretta mester will be our guest. and as we head to break look at u.s. equity futures shaping up, positive open here on this friday dow looking up 70 points at the open stay tuned

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good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq markets in times square. among stories front and center this morning, gary cohn is urging the trump administration to do more to condemn neo-nazis and white supremacists in an interview with financial times cohn said he faced a great deal of pressure to quit his job related to trump's response to charlottesville. but added as a patriotic american he's reluctant to leave his post eamon javers will join us later on this story. meantime, we're an hour away from durable goods order, economist is expecting a 6% drop for july toyota reports its luxury lexus brands saw sales fall by 4.4% in the first half of the year compared to a year earlier, that's the first time that's happened in six years. decline led by sagging demand in the u.s. which is the biggest market for lexus fed chair janet yellen preparing for a big speech later today. steve liesman joins us now from

jackson hole, wyoming. i want to see -- do we have a good shot? we probably don't. it's dark at this point. yeah beautiful shot yesterday, steve. unbelievable, that you had on that interview you know what you're doing good beat that you chose. >> reporter: well, you know, once a year -- other times, joe, the economists meet in some of the northeastern cities, they do that economics conference in january in chicago, meet in cleveland, but once a year they pick a good location you know, we always ged those people riding in, joe, who say that's a fake background. >> right. >> but it's real and beautiful so today they roll out the big guns the two most powerful central bankers in the world will be speaking here taking the podium at the kansas city fed annual symposium here janet yellen speaks at 10:00 a.m. eastern time. and that's followed by mario draghi who will take the stage

at 3:00 p.m., both highly anticipated speeches and then after that of course we have a pretty good lineup here, a lot of the action could be right here on cnbc in less than an hour now we'll be talking to cleveland fed president loretta mester, and then jay powell, fed governor at 2:20 and maurice iefld, important to global growth. all the discussion and the actual topic of the conference is global growth on yellen, she's talking about financial stability. we know that and if she sticks to the past, she will likely have some concern about the dodd/frank rollback, at the same time talking about some areas where indeed she would advocate for reform in dodd/frank and then the big question is she mentioned this market valuation concerns that crept into the minutes where the fed staff said that market valuations were elevated, changing that from notable. moving on here, the fed up activists will be speaking again today.

they spoke yesterday and the question was whether or not they should stick to this 2% inflation target and they advocated for a higher inflation target so the issue is whether or not they should stick to more unemployment and gene sperling, former nec chairman for barack obama, advocated for letting inflation run a little bit hotter. here's what he said. >> the federal reserve has underweighted the benefit of tighter -- persistently tighter labor markets and has overweighted the risk of an inflationary period. >> reporter: and last thing on draghi, i think there's some expectation it's been out there in the press that maybe he'll signal the end of qe i don't think that's going to happen today my understanding is it's going to be a good speech, an

interesting speech on big themes, but when and if the -- well, when the ecb chooses to end up saying, you know what, monetary policy we're going to be ending or reducing quantitative easing, it will be done at a press conference, not at a speech here in jackson hole. >> all right, steve, stay tuned. got someone who might know about someone coming up here, steve. >> thanks. >> for more on the fed, we bring in our next guest. do you expect any sort of policy changes being telegraphed today? >> i think the way steve described it is right. this is not really the forum you would do that. there are a couple nuances worth watching i think as you said, financial stability. yellen has said in the past you deal with that through regulation, deal with that through macro prudential, but interest rates do make a difference, when leverage builds in the system keep rates low for a long time, it will be interesting to see if she talks about financial assets. >> right

yellen i would believe would stay on script, but draghi is known to go off script in 2014 we had the possibility of qe being laid out is that the wild card here >> it is first of all, a couple reasons a wild card. i've said this before, the central banks outside the u.s. largely determine the back end of the yield curve for the u.s. because as long as rates stay low in europe, as long as rates stay low in japan, our assets flow overseas. whether she talks about the currency today is going to be a big deal currency trading up to 11, hit 119, does he reference the sfrengt of the currency as part of his discussion. something to talk about, by the way, the growth in europe continues to be the data out of germany is impressive. does he talk about the growth or does he focus on his inflation still not keeping up with the growth or not matching the growth draghi's going to be really important. i think at 3:00 that one's going to be important. >> there's a real interesting window here because he already

said effectively promising not to talk about monetary policy until autumn. >> right. >> but the job owning of the currency could easily happen today. >> there's no q and a so no back and forth on that, but you have an ecb meeting i believe september 7th, so it's pretty close. to front run that in this forum seems unlikely, but you have to watch some of the nuance. >> so, rick, the grand question is why is the u.s. ten-year at 2.2% >> there are a couple factors. we think it's going to move higher but we think it will take until the fourth quarter to move higher the first thing we talked about the pull from overseas is extraordinary in a demographic where demand for income is like nothing anybody has seen before. point two, i've described this before, we're going through the greatest cost revolution of all time, you can grow without inflation. what did y'all talk about today, yesterday, what amazon did, what it meant for whole foods, you're pressing down on the cost structure. you can run -- we would argue you can run higher than 2% growth, but inflation doesn't have to keep up.

the internet doesn't have to -- >> internet bubble when we thought everything was trading at infinity times earnings the one thing they said overall trend for society was going to be holding costs down. we didn't believe it why isn't this obvious to us what's happening we knew it 15 years ago. >> every cpi report, when you diagnose it what's happening apparel prices because we buy apparel in a different way car prices are coming down, you have an uber effect transmitting through the system food costs are coming down because efficiencies being created by food, amazon buying whole foods, et cetera every single month we see confirmation. >> bezos says other company's marges are his that's where he operates. >> so how do these companies retain pricing power >> we do a lot of work on what's shifting in the world. used to have producer surplus, consumer surplus, you're shifting down the producer surplus right into the consumer. that's why quantity of goods -- why is asia growing like it is the quantity of goods is growing

up it's hard to keep margins up what are some companies doing? i got to grow my leverage because the only way to keep i've got revenues, margins, leverage, the only way to keep my earnings up, the only way to keep my r.o.e. up, keep my leverage up. >> i wondered when kate was on yesterday from blackrock, and i also is itesther george? i asked liesman about this, everybody is staying in 2% right now. i'm not in a position to forecast like that you can't sleep at night i don't think, you got so much money you have to worry about. but if it was 2.6 gdp in the second quarter. >> yeah. >> and atlanta's up at 3.6 or 3.7, atlanta feds, let's say they're wrong, let's say it's only 2.8 again, but that's trending above 2% right now unless in the fourth quarter you think we're going back down to 1% which averages -- we don't go back then why aren't you guys raising -- the fed's notd

raising. are you stuck at 2% because it's where we've been for eight years or are there other things happening that indicate gdp numbers are misleading >> couple things potential growth in the world's lower than it's ever been, full stop if we run, which i think we can, if you run a 3% real growth, that is really impressive. and i think you can do it. >> is it going to have to be in the rearview mirror before you say it's happening >> no, no. >> you told me you're still at 2. >> so if you actually take what real economic growth is, because i think we measure gdp wrong, we've hired 16.5 million people since 2010 you've had tremendous -- when you take real goods growth, real services growth in the last couple of years, you're talking about numbers that are very substantially above 2% in an aging economy, an aging demographic. >> 2 is all you get even though things are actually better. >> potential growth is around that level i think you can run a bit lower than that. >> when are you going to ratchet up your forecast

you can say 2.25 even. give me 2.25 >> what's actually happened in terms of markets and where real growth is, hire people, retail sales pretty good, we'll see what durable goods are we don't measure right in terms of gdp we could focus all we want number 2.5, 2.7, you make no money on it. real growth in the system you see through. >> party pooper, no one will admit, maybe we are going and getting out of this eight-year sort of malaise where we didn't have a single year above -- for the first time. >> more persistent decent growth for a long time. >> because recessions don't -- or expansions don't die of old age, right >> people say at the end of the cycle, this cycle can go a bit longer for a variety of reasons we don't have to be the trough of this cycle was extremely deep when you measure trough to full potential, we're still not there yet. you can still press through for another couple of years. >> all right so you're willing to think that

maybe we're going to be above 2%. >> yes and i'm willing to say that the actual growth measured the right way in terms of real things happening -- >> that doesn't mean interest rates go higher. >> interest rates move only moderately higher. can you get a 2.5 ten-year absolutely. >> all those things sound so great. why look at those things okay, so inflation stays low because of these other factors, why can't you say, wow, this is a goldilocks -- >> if you keep discount rates down, we're going to keep the discount rate down for a long time, people underestimate that. >> thank you, rick. >> you're doing well look at that suit. >> i love that suit. >> he's doing pretty well. >> i can see you in that suit. >> you got $5 trillion, a couple basis points is all you need, right? >> we have to stay busy. >> coming up, house speaker paul ryan says congress will raise the debt ceiling so that america can pay its bills.

we're going to talk about the possibility of a default and what it could mean for president's push on tax reform and we're following the latest on hurricane harvey as it gains strength in the gulf of mexico you're looking at a picture right now of the monster storm from the international space station. we'll have the latest on harvey's impact and what it could do to the oil industry right at the top of the hour

welcome back to "squawk box. as we mentioned earlier, top white house economic advisor gary cohn spoke to the financial times about condemning neo-nazis, his job status and white house campaign for tax reform eamon javers joins us now from washington with more. >> reporter: hi, melissa you remember gary cohn was standing just next to president trump during his angry trump tower press conference last week that attracted so much attention and criticism. now gary cohn has given his first public remarks about his reaction to that event he spoke to "the financial times," here are a couple excerpts of what he had to say emphasizing he's reluctant to

leave his post despite the events of past two weeks saying i've come under enormous pressure both to resign and to remain he said the administration can and must do better he said i am reluctant to leave my post. and he said, i will not allow neo-nazis ranting jews will not replace us, to cause this jew to leave his job. gary cohn said i feel compelled to voice my distress and he said that citizens standing up for equality and freedom can never be equated with white supremacists, neo-nazis and the kkk. so the first public comments here from gary cohn about his reaction to the events in charlottesville and the president's handling of them this is interesting one, guys, because this is a long time after the events actually took place. we saw steven mnuchin, the treasury secretary, issue his statement about all of this last weekend. a much different tone from mnuchin who said that the president in no way, shape or form equates neo-nazis with peaceful protesters. we didn't see any full throated endorsement of the president here from gary cohn.

in fact, he says he's under enormous pressure to resign, but he is reluctant to do so gary cohn also impolilicitly t criticizing the president saying the administration can and must do better. he doesn't say donald trump can and must do better so a lot of speculation will be launched from this about whether or not the president authorized gar cohn to give this interview and authorize this level or if this is him speaking out on his own. >> i'm reluctant to leave -- he said i'm under enormous pressure to leave and to stay. >> right. >> so didn't just say he's under enormous pressure to leave i'll tell you one thing, eamon, i thought it was over the top, but we had a business professor say the market would crash if gary cohn left, however i don't

think that's the case, but i do think the market wants gary cohn to stay. and this piece after two weeks saying i'm reluctant to leave sort of indicates he's going to stay i think that's why maybe one of the reasons the market's up 80 and the dollar's doing better and everything else. i don't know. >> reporter: it absolutely indicates that and i would just remember back to on friday when steve bannon was leaving and we were reporting that live on cnbc, we heard cheers from the floor of the new york stock exchange at the news that bannon was leaving. i'm assuming, you guys are the market experts, but i'm assuming that's because the traders on the floor felt if bannon was leaving, cohn was likely to stay and that was positive for tax reform and markets markets have embraced gary cohn as a figure of tax reform and pro-market sentiment inside this white house. >> and globalists don't care that much about america first -- no, i'm kidding. anyway, that might have had something to do with it. >> reporter: the other question is how the president will react to this piece by gary cohn or

this interview. >> i've got twitter up right here i'll tell you, because i got twitter right here @realdonald dr here @realdonaldtrump. we may know in a few minutes. >> he's been tweeting vo sifr rously this morning. >> we got that at least. house speaker paul ryan assured that congress -- or he assured that congress will approve a debt ceiling increase. here it is >> we will pay our debts and we will make the debt limit -- we will hit the increase before this is penetrated meaning we will pass a debt limit increase before we hit the debt limit plenty of options in front of us that one just wasn't available for us. >> do those options include a clean hike of the debt ceiling >> there's a bunch of options in front of us. i'm not going to negotiate to the media, but we have a lot of options in front of us i'm really not worried about getting this done because i know we will get this done and pass the increase before we hit the debt limit. >> let's bring in steve bell,

senior advisor with the bipartisan policy center, a think tank based in d.c. that independently tracks the debt limit. formerly served as staff director of the senate budget committee. the case has been made that with tax reform right in front of us here and now we know the president's going to let the house deal with it, so it's a real possibility something happens. do you think, the point you made, they're not going to take a stand here, the white house on this debt limit. it's going to get done do you think that true, steve? or could there be an issue >> no, i think it's going to get done since 1986 we've been going through this and every year we worry about it and every year it gets done. i wouldn't think about the tax reform separately, however, from what we do eventually on the debt limit there's a possibility you'll have a short term increase in the debt limit let's say 90 days get to the end of december and in that time you'll be able to solve maybe how much money we're going to spend keeping

government open. is there a possibility of some agreement on taxes and is there some agreement on spending for the next fiscal year so i think -- i know the debt limit will be increased. the question is for how long and what will they make of that extra time. >> nobody knows. some time the difference between as a negotiator what the president is up to but when you say, you know, i want this wall or i'm going to close down the government, you could see that almost as one of his rallies before he was elected president. is that a threat or something that he would actually follow through on i know you're not in his brain, but. >> having watched this in the past, there's no doubt in my mind that he's now drawn a line in the sand. of course that's always dangerous, but he said it again and again. and so what we're talking about now is can we get the appropriate -- the spending bills for next year done on

time the answer is sure, but you're not going to get a law funded at any level out of the united states senate. so when you get those spending bills sent to the president, if they get there in time, he's going to have a decision to make and that is, will i close down the government, a partial government shutdown, until i get my 1.6 billion to start building a wall now, he felt he got robbed earlier this year when he backed down from that and we saw the foi -- fiscal year '17 budget. now i think we'll look at once burned, twice shy, i'm going to really stick to my guns this time so i think we will have at least a short-term partial government shutdown. >> really? >> oh, yes i think that's baked in the cake >> would that be worth the political cost to president trump to get the wall or will republicans be to blame about that >> i don't think he cares about the republican brand i think what he cares about is

this 35% to 38% of the people that still are going to be with him and are with him and so what you set up is this, democrats get to play to their base by saying we're not going to vote for a wall the president gets to play to his base by saying, by golly, we're going to fund that wall. and left out in the lurch is what i'm going to call the third party, which is most congressional republicans. >> wow markets haven't really reflected that we'll see whether they do eventually, steve. but thanks for being with us this morning appreciate it. >> thanks a lot. >> okay. >> coming up, stocks to watch ahead of the opening bell and the futures right now pointding to a higher open on this friday session at 8:00 a.m. eastern time texas braces for harvey, a live report from the ground as preparations continue along the gulf of mexico "squawk box" will be right back.

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bracing for harvey, the monster hurricane intensifying in the gulf of mexico. oil markets are on edge. >> uber's "game of thrones" not over yet the embattled start-up holding a crucial board meeting. and former ge ceo jeff immelt will be in the room. >> plus, fed chair janet yellen and ecb president mario draghi both taking the stage at jackson hole we're going to talk to cleveland fed president loretta mester as the third hour of cnbc's "squawk box" begins right now. good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky and off.

we have joe terranova and melissa. let's take a look premarket session has gone ongoing up now indicated the dow up 75. the nasdaq indicated up 26 in the s&p indicated up 10. i'll take a quick look at yields, but there's some scuttlebutt that an interview with gary cohn where mr. cohn says i'm reluctant to resign i've been under enormous pressure to both stay and resign, but i'm reluctant, i've got things i want to do is basically what he said and markets seem to be ticking up as that interview -- >> rightfully so. >> -- became publicized. and you would say rightfully so. gary cohn is a good man to have there in terms of dealing with the financial markets. those of us that actually know gary cohn know him to be

thoughtful, gracious and someone that understands financial markets and his presence in that administration is incredibly important to wall street. >> not the first time someone that had street cred was enormously healthy, remember robert reuben when he came in with the clinton administration, it buys you respectability. >> 100%. because there will at some point be an economic crisis and to have gary in the room -- >> hank paulsen. >> exactly >> sounds like i'm -- a who's who of goldman. >> it is basically. >> jim cramer from goldman. >> exactly. >> he'd be great in the administration >> i don't think that's happening any time soon. you know, he's outspoken, but compared with president trump maybe he, you know, maybe there is a place for that in politics nowadays any way, hurricane harvey is gaining strength it is now a category 2 hurricane. let's get an update on the

storm's path from wvit meteorologist kaitlyn mcgrath joins us now good morning. >> hey there the texas gulf coast is already starting to feel the impacts from harvey, some of the outer convective bands already starting to push their way onshore with the heart of harvey just to the south and east of corpus christi, texas. right now sustained winds at 110 miles per hour, just one miles per hour away from being a major category 3 storm now, we have a number of hurricane warnings in place across much of the texas gulf coast. also, a storm surge warning in effect from parts of galveston down through corpus christi, really the majority of the texas gulf coast the only exception is trinity and galveston bay and down through ports manfield area south, that's where we have a storm surge watch in effect. now, on top of the 6 to 12 foot storm surge incredible rainfall totals are expected between 15 to 25 inches for many areas. localized up to 35 inches. you can really see where the heart of that rainfall will be

now, keep in mind once the storm surge moves in and this rainfall totals continue to accumulate, the rain is not goingto have anywhere to go so flooding is a major concern as harvey continues to work its way toward the texas gulf coast. and the reason the rainfall totals are so high, it's really not going to move. it's going to linger just close enough to the gulf of mexico to keep filtering in that warm water to sustain the hurricane not only sustain it but keep it as a strong hurricane, a category 3 hurricane once it makes landfall it will slowly continue to weaken as we head through the weekend and start of next week. but overall this rain is going to really stick around once it moves in so flooding remains the primary concern as we continue to track harvey back to you. >> all right thank you. a number of refiners appear to be in harvey's path on the texas and western louisiana coast. jackie deangelis joins us now from corpus christi, texas hi, jackie. >> reporter: good morning to you, melissa well, we're certainly keeping an eye on the refineries, but the latest out from the national hurricane service an advisory to people in middle texas, if you're making those hurricane

preparations, make them faster, speed it up. and i'll tell you, from being here on the ground as day is breaking, the rain is definitely a lot steadier than it was earlier this morning and this wind is really starting to kick up now, the observations that we've made just around here in corpus christi, people are starting to board up houses, hotels, businesses we saw some signs that said we are closed on friday you're seeing those sandbags at the door to protect some of those entryways. and tape across the windows potentially those gusts that were mentioned could be 125 miles per hour you don't want the windows to start shattering we also took stops in town and saw that people are starting to stock up on supplies like food and water. some places are running out of those things walmart actually outside of corpus christi not so much in harm's way, a lot of empty shelves and hard to find even one bottle of water. so we're watching what's happening here on the ground, guys we're going to bring you more

updates. >> jackie, thank you finally got light where she is it was kind of a cool shot earlier, looking at the waves roll in at predawn for more on the hurricane's potential disruption, roger gunther at the port of houston he's the executive director, joins us on the squawk newsline. roger, when did you get the last update and is anything changed? and specifically exactly what are we expecting now for houston? >> well, good morning. and we've been monitoring this the last update on the weather is what we're hearing exactly what we heard just now sounds like it's bearing down toward the lower texas coast and the corpus christi area however this is going to be a -- this is a big storm. it's going to be a lengthy event for all of us. we're expecting a lot of rain here in houston for several days and likely to start seeing some

tropical force -- tropical storm force winds during the weekend so we're prepared. and we've been preparing as a port for several days now for things to come >> and if you had to pick the top three things that the port has done in the past -- and it's fortunate now, we know in advance, but what are the three most important things for the port to get done in the last 72 hours? >> well, several things. we have a great partnership here in the port community. and this port nation team headed up by the coast guard and channel facility reps and the port of houston, the pilots convening on a regular basis and yesterday the captain of the port ordered a condition whereby ships had to evacuate the ports, so we ceased bringing inbound

vessels into the port and our houston pilots have done a good job working all night to try to get these ships out of here. i think there's a handful left but preparing our terminals. you know, the largest container terminal in the gulf, we've been preparing our port for that, tying down all the cranes and making sure they're secure in the event we took a direct hit from this storm. >> looks unlikely at this point. were you there in 2008 or is this new to you? have you seen this before? >> no, this is not new i've been around for a while we were in the middle of it in hurricane ike. and we've got a lot of people that make this happen work diligently so we're prepared. we have a plan for our port, our terminals and for the greater port in general. so we're always a step ahead of the action here and making sure we're ready to get our people out of harm's way.

>> your german, right? i found out late in life my birth name is guenther, it means lawyer in german from like the fourth century a.d., did you know that? >> yes, i did. it is a lengthy descendant there from germany, but, no, i was born and raised here in bay town in the houston area. >> well, you're a good looking guy, which i think is similar -- i see a little bit of a resemblance there too. but the guenthers in general are good looking, melissa, wouldn't you say? i mean, maybe not your cup of tea. >> uh. >> let me go to joe on this. roger, thank you, thanks for your time. >> you can read my eye rolls really well, jim, at this point. >> did you see that wasn't on camera and i wasn't getting what i wanted, so i can go to joe. >> that's fine

all right. let's take a closer look at how harvey will impact refineries. joining us now the managing director and energy analyst at cowen. sam, great to have you with us. >> good morning. >> we've certainly see a reaction in some of the refinery stocks so far this week. valero up about 4.8%, phillips 66 up, is there a knee jerk reaction in refiners, is that one you would buy or sell? >> the market's pretty efficient at applying, you know, the earnings response to margins expanding. i'd say the stocks are actually following the commodities here refineries have already been shut down on a precautionary basis. you know, for third quarter we were actually already pretty materially above consensus for eps across the group and so i guess you could say this is kind of adding to that theme that was already in place. but in general, i don't expect the momentum to last much longer beyond the impact of the storm

obviously depending on the severity and, you know, safety is a concern at this point so the refining companies are going to manage that. >> sure. >> but as far as the earnings impact, i'd say it's pretty much already been reflected. >> as you track the progress of the storm, sam, what concerns you most we had an analyst earlier in the show saying that flooding is a concern. if there's more flooding than normal that could actually cause damage to the refineries, which could cause a whole other ball game in terms of being offline. >> yeah, flooding is definitely more of a concern than say wind or some damage from the overall conditions that would be something that would extend the outages already in place for a longer period of time but, again, you know, storms come through the gulf pretty often. this is a big one, you know, the biggest in over a decade so that's something to consider. but certainly between flooding and wind, flooding is the one that would have the longer term consequences most likely. >> sam, it's joe so we see a sustainable rebound in a name like valero or marathon because they are not

geographically impacted as much as some of the other refiners would be >> well, valero actually is. it looks like the storm is headed for corpus christi and valero has a pretty big refinery there, but they've taken it offline on a precautionary basis, which is easier to manage if it was knocked out by the storm. so i guess even if it's in the path of this storm and the fact it's been brought down on a precautionary basis makes it easier to ramp back up, you know, when the storm is passed if the company's managing it well, it shouldn't have that big of a long term impact. >> what's your top pick for the next 12 months >> valero and endeavor the two top picks. i think they have the clearest path to dividend increases and company specific catalysts in place. >> great sam, thanks a lot. appreciate it. sam margolin of cowen. president trump will launch a major campaign on tax reform

next week, that's according to nec director gary cohn in an interview with financial times, president's top economic advisor said the first will be a push in a series to convince the public of the need to revamp the tax system these are cohn's first public comments since president trump's controversial response to the violence in charlottesville. cohn, who is jewish, said he's come under enormous pressure from some to resign and from others to stay he says as a patriotic american he says i am reluctant to leave my post because i feel a duty to fulfill my commitment to work on behalf of the american people. but i also feel compelled to voice my distress over the events of the last two weeks. >> okay. coming up, is former ge ceo jeff immelt heading to silicon valley we could be one step closer to finding out. uber holding a crucial board meeting today for its future details straight ahead, stay d,oue tcngsqwkua box" on cnbc

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uber holding a crucial board meeting today on agenda potential vote for next ceo.

deirdre bosa joins us now. >> good morning, melissa we're hearing the board is meeting early afternoon here, that would be late afternoon there. given that this is uber, who knows what else could happen between now and then last night early uber investor sent a letter to the board -- another one, and filed legal document saying he had to intervene in the benchmark lawsuit against former ousted ceo travis kalanick. in it he accuses benchmark of plotting to take over the board, leaking details from the holder report and trying to push its own candidate for next ceo candidate meg whitman. we reported earlier this week benchmark was trying to reintroduce whitman and she was their prfred candidate this is something benchmark has denied and whitman has publicly stood by her earlier statements she would not be ceo but this is uber and my sources haven't changed their stance that whitman is still somehow in the running backed by benchmark. later today though the two other remaining candidates are expected to be at this board

meeting, jeff immelt and another who amazingly, guys, has not been leaked. back over to you. >> all right, thank you. >> coming up, investors gearing up for key speeches from fed chair janet yellen and mario draghi at jackson hole we're going to tell you what they might say and take you there live with a first on cnbc interview with cleveland fed president loretta mester that's at 8:30 a.m. eastern, just 12 minutes away plus, we're keeping an eye on hurricane harvey and the impact on the energy market you can see the complex right there, not a lot of action "squawk box" will be right back. who's the new guy? they call him the whisperer. the whisperer? why do they call him the whisperer? he talks to planes. he talks to planes. watch this. hey watson, what's avionics telling you? maintenance records and performance data suggest replacing capacitor c4. not bad. what's with the coffee maker? sorry. we are not on speaking terms.

stocks to watch, auto desk reporting a narrower than expected second quarter loss, revenue fell about 9% but still beat estimates software maker continues to shift its business to rely on money generated from subscriptions instead of licensing deals. this never gets old, no matter where it is and what sport, check this out a squirrel stole the show at a preseason matchup between the eagles and the dolphins last night. it scampered across the field in the second quarter and then hunker hunkered down at the 25 yard line and after brief excitement the critter bolted toward the

sideline and left the field. i thought greco did the 7:00 a.m. hour. >> what's wrong with his tail? look at that tail, right it's bizarre. >> yeah. i don't know we don't know the -- who knows the history -- >> the type of squirrel, the je nis. >> coming up, the state of wyoming is all fed up this week, get it central bankers gathering in the mountains for an annual meeting. some call it the comicon of the fed -- of the federal reserve. others say woodstock i like comicon because they're geeky "star wars" type of people steve liesman, speaking of "star wars" type people, steve liesman sits down with cleveland fed president loretta mester, that's next

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oh, there we are good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square among the stories front and center, music streaming service spotify struck a new deal with warner music, follows deals struck earlier this year with universal, music group and sony, the warner deal was considered the last that spotify needed ahead of a possible ipo. shares of starbucks are moving higher this morning. stock was upgraded to outperform from neutral at wedbush, which says technology improvements at the coffee chain will help comp store sales outperform consensus expectations and it was once a great anchor here, they called this quintilies. >> really? >> yes beautiful. quintiles welcome the newest member of s&p 500.

will replace whole foods in the index prior to next tuesday's open the acquisition of whole foods by amazon is expected to be completed on monday. >> all right we have a tweet. this just came in apparently. >> it just happened. this can happen at any time. president trump just tweeting strange statement by bob corker considering he's constantly asking me whether or not he should run again in 2018 tennessee not happy. do we have the -- was it a statement he made a week ago about stability? remember, he was one of the first republicans -- >> is he saying tennessee is not happy or he is not happy, how do we read that >> i think he's saying that tennessee is not happy and corker saying should i run again or am i -- i don't know. >> okay. >> but he's definitely given -- it wasn't gratuitous nastiness

with corker, but it was -- did you see it i mean, it was an unbelievable statement from a republican. >> they have a history i mean, they've never really gotten along. >> but, lindsey graham, john mccain, but then this was like i don't think the president has shown the stability or the competence to stand -- i don't know but it certainly gave the other side when "usa today" see that article yesterday front page, the scuttlebutt is growing that trump is insane. the most widespread newspaper, they have no problem writing that anyway, we're in uncharted territory here. >> yeah, i mean, definitely. and yet the markets are also to the upside, which is the amazing thing. >> i might believe the markets before i believed -- >> that the markets would be record highs -- >> no, before i go and live in the ecochamber that is the mainstream media where they all talk to each other and think

that they are right about what they're saying, before i'd live there, i'd live in the markets. >> right. >> but that's just me. >> which is the right place to be living. >> right >> clearly, clearly so far, you know what's interesting is that in the month of august we've been able to weather so many of these potential market disruptions. and the ability to do that is all founded upon strong earnings and that really is, i think, lost in the conversation that we're witnessing consecutive. >> strong earnings and low interest -- i mean, low interest rates have a huge, right, underpinning to these evaluations. >> absolutely. but let's not dismiss the fact it's now two consecutive quarters where we're witnessing strong earnings growth, and you can't ignore that condition if you're going to be investing. >> absolutely. here's what could move the markets, we've seen the futures up strongly all throughout the morning, but we are seconds away from july durable goods orders

and ahead of those july durable goods orders we had the dow looking at about 68 points at the open, s&p at about 9 points at the open and as for the ten-year yield we've got that right now trading at 2.1956% rick santelli is standing by at the cme in chicago with the numbers. rick >> yes, and the survey says. boy, we're on time, huh? minus 6.8 on durable goods that is a preliminary number so we're going to add some pieces to the puzzle for ongoing next couple weeks. but it's still close to 1% lower than expected. if we look at some of the subs, ex transportation it's up 0.5%, that's pretty good, definitely better than the 0.1 sequentially we follow. now let's look at the money ball capital goods orders nondefense eu ex aircraft, up 0.4 beats the unchanged last time and pretty much what we

expected if you look at shipments versus orders, up 1%, that's a healthy number and that's following a half a percent revision of last month from 0.1 to 0.6. how does that 0.4 on capital goods orders stand out for the year well, 1.3 was the beginning of the year that was powerful. next was, what, may was 0.8. so this is the third best number of the year, not bad at 0.4, we can do better. interest rates, 2.20 right now on 10s, they sell yesterday between 2.19 and 2.20, last friday before that 2.19 and before that 2.19 we're comfortable at the low spectrum of the 2017 closing yield range. joe, back to you, buddy. >> thank you, rick we got places to go, people to see, things to do. let's get to jackson hole where central bankers are gathering for an annual meeting. steve liesman joins us now with a special guest. hi, steve. >> reporter: hey, joe, good

morning. real quick on the durables number, that's a boeing thing. they were up 6% last month, they're down this month, and rick was absolutely right going to the ex transportation number. loretta mester -- joined by loretta mester, cleveland fed president. i wanted to just throw this right at you. >> okay. >> 0.4 on the business investment number, rick said third best number of the year, do you see that turning around >> i think business investment has been one of the bright spots of the economy so far this year because it's been lagging the last two years so having that come up, manufacturing come back is a very good thing, investment of course drives productivity, and productivity's been very low, so i'm very positive about that that's a positive for the economy. >> i want to pick up on a discussion i had with my colleague joe kernen yesterday who said, hey, we did 2.6 in the second quarter it looks like we're on track to do a 2.8, don't count your chicken, et cetera, is it time to up the forecast here? are we doing better than the boring 2%?

>> well, i have a little bit above 2% in my forecast. i have 2% as my long run growth rate and i think we're going to be growing a bit above trend that's part of my forecast going forward and why i support this gradual reduction in a combination of the economy in terms of monetary policy. >> so sounds like you're giving a little bit, but not much of a change. >> no, i don't think so. i think it's too early to say that we've seen the quarterly numbers go up and down the first quarter of course for the last several years has been low. so this bounceback we've seen, and that's the pattern we've been seeing, so i would say a little bit above trend, which is a good thing labor markets continue to be strong 180,000 plus per month, which is about what it was last year. which is a very good thing now inflation is the place where, you know, there's been a couple of weak readings, but again, the best forecast has it going back up to 2% gradually over time. it seems that it's time to keep on this gradual reduction combination. >> i want to come back to the inflation question but i want to continue on this idea. >> okay. >> business confidence is up,

and that has to do with, you know, came in with the election of the president is there some form of step change in the thinking of business that is flowing into the economy? we've been looking for this evidence that business confidence is translated into real activity, and consumer confidence, are you seeing it yet? >> so actually one of the great things of being a regional fed president is you get to talk to a lot of business people and consumer and labor representatives. and what we've been hearing most recently is that actually the confidence that started very high after the election didn't really drive activity. and now the confidence is a little bit tempered. and now some firms, a couple firms, said we're in a wait and see mode now we want to wait a little bit to see if things get clear before they invest in so if anything it may be a little weakening in terms of activity not pro strength. >> you guys are like businesses in the sense that you have to forecast what's going to happen from a policy standpoint i know you didn't dial in a lot

of expectation for fiscal stimulus have you dialed it back more or what's your expectation right now for what's going to happen out of congress? >> well, you're exactly right. i didn't put in a lot of fiscal stimulus i had a small -- it's hard to predict what's going to happen the reason that i have an above trend growth in my forecast is really about the momentum in the underlying economy it wasn't being driven by a big fiscal package that would come in or big tax changes. it would be great if we can get on a good path in terms of the fiscal side, but i didn'tbuild that into my forecast. >> fed chair janet yellen, speaking of financial stability today, i want to ask you two questions about that first is, there was a statement in the minutes that the fed staff has now upgraded their concern about market valuations from being notable to being elevated where do you stand on this issue of market valuations >> i'm certainly looking at financial markets. one of the risk of having low interest rates for as long as we have had is that it can gender some fiscal imbalances and also search fiscal year behavior so

i'm focused on that on the rest of the forecast. i think there's two things going on with stock prices and i'm not overly concerned with where they are now, for one thing earnings have been good in business earnings which is a driver, but low interest rates, you're discounted lower rate and that means history of the stock market is going to look higher valued than it would be with historically levels of interest rates. >> so you led me perfectly into the second part of the financial stability question do you worry that these low interest rates are ones that lead to financial instability and create excess leverage in the system >> i think it's a risk and i think we have to take those risks into account when we're thinking about where we want monetary policy to be given the outlook on the real side and the inflation part of the economy. so, again, it is certainly a risk i'm attuned to and one of the supporting reasons for why i think this gradual path of reducing the accommodation, we had to put in a lot of accommodation to address the financial crisis in great recession. now the economy is back to normal getting monetary policy

back to normal i think is the appropriate thing to do. >> several of your colleagues want to wait and see what happens to the inflation data before forging ahead with that third rate hike this year. where do you stand on that >> so, i don't think we can wait until inflation gets back up to 2% we've learned over time that we need to be preemptive. and that means we have to be forward looking. and, frankly, you know, inflation is very hard to forecast, but a forecast of where inflation is today is not a very good forecast of where it's going tomorrow. in fact, if you actually look since the 1990s the best forecast you can have is 2% inflation. so, again, i admit it's hard to forecast inflation, but i certainly wouldn't want to wait until we get up -- >> is that a yes you want to forge ahead with the third rate hike >> yes, i want to reduce accommodation. when we do that in any particular meaning it's going to depend on what we see on the economy at that time and developing a consensus around it but i am certainly supportive of this gradual reduction in

accommodation both on the balance sheet, which of course is another aspect of our policy, and also on interest rates. >> you came up through the federal reserve system you were in philadelphia working for president bosser and now you're the head of a regional bank, you're an economist by training how do you feel about a non-economist running the fed? >> so, frankly, i always think for myself being an economist is very helpful to me in my job but the fed is a very strong institution and one of the strengths is that you can have very different backgrounds brought to the table understanding financial markets very important thing for the fed. do you have to be a ph.d. economist, probably not, but i do think you need ph.d. economists around the table as part -- >> not necessarily in charge >> i think for me personally it helps me to be an economist, but other people have different backgrounds. and, you know, they could probably do the job with their backgrounds in a background i don't have. >> apologies to my great producer, courtney, i have one more quick question for you. the government shutdown later --

potentially later next month, does that give you pause as to forging ahead with reducing the balance sheet or with hiking rate sns. >> you know, i really don't think it will change my view on where we want to go because, again, i'm looking over the medium and longer run when i'm thinking of monetary policy. and i really think that we need to be doing reduction of accommodation at this point. in a gradual way. >> loretta mester, thanks for joining us. >> thank you very much, steve. >> guys, back to you from jackson hole we have coverage all day including jay powell and headlines of janet yellen speech coming up at 10:00 a.m. eastern. >> that's something to look forward to, steve. you got the fake background shot back up again. >> this is the same studio they use for the moon landing, joe. >> that's right, where the flag was blowing in the breeze. yeah that's one of my favorite stories. someone said that to buzz aldrin and he coal cocked the guy if you sit on top of a candle

that's getting lit and go do that and someone tells you you didn't do that, wouldn't you be upset? i love that story. anyway, coming up -- is that buzz lightyear coming up, president trump's top economic advisor gary cohn speaking out we're going to tell you what he said about tax reform, plus the pressure he's faced to step down and stay in his post that's next. and later, the trade debate, governor pete ricketts back from a trade mission in canada. he'll join us after the break to talk nafta and other things. stay with us

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welcome back to "squawk on the street." latest look at the futures which have been trading higher, maybe seem to uptick on this news in an interview with the "financial times" gary cohn said he faced a great deal of pressure to both quit and stay in his job following the controversy over president trump's response to charlottesville. but he added in his words, as a patriotic american he's reluctant to leave his post. cohn also spoke out about taxes saying president trump will launch a major campaign on tax reform as early as next week in round two of nafta talks kicks off in just a few weeks. our next guest is just back from a trade trip to canada joining us now nebraska governor

pete ricketts. governor, good to see you. >> good morning. thanks for having me on. >> how were those ribs >> say that again? >> how are those ribs that i sent you >> oh, hey, those ribs were awesome. thank you very much. my wife does a wonderful job of preparing them. >> excellent i lost a bet what was it creighton? >> yeah. >> creighton and xavier. we'll do it again. i want to get my money back in february and march. >> remember, we got the best steaks in the world here in nebraska. >> yes, you do, among the best among the best maybe the best i don't know you saw some of president trump's comments about nafta who knows a lot of times what lurks in the minds of men. was that negotiating, or do you think really down the road we walk away from that? and what did canada have to say about that when you were up there? >> well, i want to -- when i went to canada it was really about letting everybody in canada know how much we appreciate the trading relationship because that's the largest trading partner for nebraska is

canada it's the fourth largest agricultural trading partner for nebraska and i certainly think there's lots of opportunities to modernize the nafta agreement. you know, it's 23 years old. we want to see that we continue to have the market access that has been so successful for us as a state under nafta. we want to see some of those nontariff barriers come down because they still exist with our trading partners in, you know, for example, canada. and we want to see it modernized reflect technology that's changing for example, agriculture, biosciences. but think about e-commerce, that didn't really exist 24 years ago. so there's lots of opportunities, certainly we want to see that modernization. but we also want to remind everybody this agreement has been tremendously successful for all three countries. and in particular for nebraska as a way for us to be able to grow our exports. >> but there's -- you know, that's been pointed out. there have been benefits there have been some negatives as well. i mean, do you think it's possible that we exit

completely or do you think -- that was my first question, do you think that was posturing by president trump, or negotiating, or do you think it's possible that this -- that a compromise is not reached and we just let it -- we just exit it? >> well, i certainly wouldn't presume to speak for the president, but one of the things that we've been encouraging the trump administration to do is really, you know, remember how important this agreement is especially for rural parts of america and especially in rural nebraska you know, we have a lot of farmers and ranchers that are able to expand their operations because of exports it's 95% of the world's consumers lie outside the border of the united states if we're going to grow our economy, we have to go out and reach them and canada and mexico are our top trading partners here in nebraska if we're going to grow our state, create more jobs, something like 14 million jobs in the united states are related back to trade and that nafta agreement. so we want to make sure that, yes, there's opportunities to improve it, but if we don't have

that agreement going forward, that's going to create disruptions to those relationships. and that's going to really, frankly, slow job growth. >> do you think -- so you're well versed on the canadian side of things. that's not the whole story, obviously. we've got mexico in the south. does nebraska affected by what happens on that border as well, governor >> yeah, absolutely. mexico is, you know, our second largest trading partner and the largest market for corn, which is one of our biggest products, also for dairy and sweeteners, number two place that we, for example, ship our soybeans so it's a big marketplace for us as well. and, again, we want to make sure that whatever we're doing with regard to improving this nafta agreement, and we do think there's opportunities to do that, we don't want to disrupt that relationship because it has been so important for us growing our state. >> all right governor, thank you. we appreciate you joining us

we always do talk sports i don't know why i guess nebraska not a whole lot else -- no, no, that's not true. >> we can talk cubs. >> you got warren buffett. >> oh, yeah,we could talk cubs you lost yesterday 4-2. >> we did. but we took two out of three we're still doing well in the division. >> it was 19-3, one of those games, i saw that. yeah anyway, what about nebraska this year, do you know? any good >> you know, actually, i was just at one of the football practices this week. you know, we could look pretty good we could be surprising this year people should pay attention. >> alabama again, what do they eat down there that -- do you know? >> i don't know. they started bringing in nebraska beef, that's exactly what they're doing. >> i knew you'd find a way to tie it back to nebraska. anyway, the cornhuskers, thank you. appreciate it. >> thank you very much. >> we'll talk towards february about the next tournament. >> all right >> all right see you. >> when we return, floyd mayweather and conor mcgregor

will get in the ring for the moment of truth in a record setting event. jane wells is getting her boxing gloves on. you're lacing up, right, jane? what do you have coming up >> pow-pow they're preparing for the weigh-in later today, but the odds would suggest it's not a fair fight mayweather is heavily favored. but most people are betting on conor mcgregor and if he pulls an uet, oypsfld mayweather won't be the biggest loser. we'll have that story when we come back.

could be a boxing bout for the ages a look at the big money behind the fight. amazing money. >> it is amazing, joe. they're calling it a spectacle but the money is certainly spectacular. as an undefeated champion comes out of retirement to fight the most popular ufc athlete ever. now floyd mayweather and connor mcgregor have taken this thing on theroad they did a huge road trip to hype this event. lots of trash talking and shoving though this week their final face-off before cameras was more subdued pap pay per views could surpass a half million dollars and the purse could set a record

defending on paper view income most of purse going to mayweather but connor mcgregor will still make far more potentially over $100 million than he made in his entire ufc career the odds remain heavily against him. he never boxed he never lost a boxing match but so many people are betting on the irish man. but what if he wins. >> would it be the worst thing ever to happen in this area. >> it would be without a doubt. >> runs the sports book for mgm resorts. a $100 bet would be $18 on a mayweather win and $350 on a mcgregor win and 95% of the bets so far are on mcgregor. >> so we always need mayweather to win this isn't a new position for us to be in he's delivered every time. and that's why mgm loves mayweather and that's why he fights all the time. >> mcgregor wins. >> great rematch hopefully

if floyd wins i he'll be 50 and 0 and awe're going to put a statue in the corner so either way we win. >> all right well, most of the individual bets are on mcgregor, most of the money is on money mayweather gm took in two $1 million debts on mayweather and the odds are starting to widen again and mgm is going to reopen betting between rounds if you're in nevada using their app so you can either double down or hedge based on how the fight is going. guys back to you. >> i just saw oscar de la hoya said no way. he said if mcgregor is not going to land a second punch and that mayweather is a master at what he does and it's not going to be a fair fight so we'll see. >> may weather likes to bet

i wonder if he's betting on himself. >> he is betting on himself and when mcgregor is asked if he's betting he said i don't know i don't think about it and then made a jab verbally at mayweather like mayweather bets a lot and maybe that's why he needs to make more money for this fight ouch. >> you're not going to get to go are you jane that would be a heck of a -- >> no but i will be watching at a friend's house i don't even have to pay the $99.95 to show time. i'll have to bring it to a friend. >> thank you all right thank you. >> up next an analyst call on twitter taking a toll on the stock this morning that story is next we'll be right back.

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ourselves. >> be the person he has a great dog be the person your dog thinks you are and you'll be a great human. good luck. good luck houston and corpus christie and we'll see you on monday make sure that you join us for squawk on the street now >> futures are up. yellen speaks in an hour gary tells the fte he is staying in his job and harvey makes land fall tonight moderate gains in